[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
BUILDING THE FUTURE: HOW SMALL HOME
BUILDERS ARE CLOSING AMERICA'S HOUSING
GAP
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MAY 21, 2026
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 119-036
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
63-840 WASHINGTON : 2026
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HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
JIMMY PATRONIS, Florida
CLAY FULLER, Georgia
NYDIA VELAZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
MAGGIE GOODLANDER, New Hampshire
Sean Dillon, Majority Staff Director
Melissa Jung, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Roger Williams.............................................. 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Mr. Bill Owens, Chairman of the Board, National Association of
Home Builders, Flagstaff, AZ................................... 5
Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of
Architecture, Northeastern University, Cambridge, MA........... 7
Mr. Eric Schaefer, Chief Business Development Officer, Fading
West, Buena Vista, CO.......................................... 8
Ms. Emily DiVito, Senior Advisor for Economic Policy, Groundwork
Collaborative, Washington, DC.................................. 10
APPENDIX
Prepared Statements:
Mr. Bill Owens, Chairman of the Board, National Association
of Home Builders, Flagstaff, AZ............................ 33
Dr. Ivan Rupnik, PhD, Founding Partner, MOD X, Professor of
Architecture, Northeastern University, Cambridge, MA....... 46
Mr. Eric Schaefer, Chief Business Development Officer, Fading
West, Buena Vista, CO...................................... 56
Ms. Emily DiVito, Senior Advisor for Economic Policy,
Groundwork Collaborative, Washington, DC................... 63
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
BUILDING THE FUTURE: HOW SMALL HOME BUILDERS ARE CLOSING AMERICA'S
HOUSING GAP
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THURSDAY, MAY 21, 2026
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:02 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams
[chairman of the Committee] presiding.
Present: Representatives Williams, Meuser, Jack, Velazquez,
McGarvey, Scholten, McIver, Cisneros, Morrison, Tran,
Olszewski, and Goodlander.
Chairman WILLIAMS. Good morning to everyone. I now call the
Committee on Small Business to order. Without objection, the
Chair is authorized to declare a recess of the committee at any
time, and I now recognize myself for my opening statement.
Good morning and welcome to today's hearing titled Building
the Future: How Small Home Builders are closing America's
housing gap. I want to thank our witnesses for joining us today
and for lending their time and expertise to this important
conversation. And homeownership remains a cornerstone of the
American dream. Homeownership represents more than just a roof
over your head. It is the foundation of personal stability and
freedom and a place where families are formed, children are
raised, and memories are made. It is where much of America's
small business activity begins, with millions of entrepreneurs
launching and operating businesses from their homes. Roughly
half of all new businesses start in the home. But that dream,
for too many Americans, feels increasingly out of reach. Our
nation is facing a serious supply and affordability challenge.
Today, more than half, one-half of the American households
cannot afford a $300,000 home. And when housing construction
slows and housing becomes unattainable, communities stagnate,
growth slows, and young families are priced out. Priced out.
Main street across the country feel that the consequences
as fewer people are able to plant roots, start businesses, and
invest in their neighborhoods. Amid these challenges, small
homebuilders have become essential. They have often the most
agile, responsive, and innovative builders willing to meet that
moment. Across the country, small business and small
homebuilders are pushing the boundaries of what is possible in
housing delivery. Whether through modular or manufactured
housing, or emerging methods like 3D printed construction,
small home builders are re-imagining how homes are built from
the concept to completion. These innovations offer real
promise. By reshaping our approach to housing construction,
these innovations can deliver faster construction timelines,
lower material costs, reduce waste, and offer greater
efficiency in bringing homes to the market.
Yet despite this momentum, significant barriers remain for
the small homebuilders across the country. Key challenges such
as overregulation and access to capital continue to drive up
home costs and constrain supply. In some cases, much as 40
percent of the cost of multifamily home development is tied
to--is not tied to brick and mortar, but to navigating layers
of compliance costs, locally and state and federal
requirements.
At a time when many families are struggling to find an
affordable place to live, we must ask hard questions about
whether our current system is helping meet those moments.
Because often the solutions already exist in the ingenuity of
builders and entrepreneurs across this country. What they need
is a space to build, the clarity to plan, and the freedom to
innovate as they can deliver their homes to Americans that we
need urgently. Local officials across the country are beginning
to realize this, and needless to say, whatever local
regulations have been loosened, like in Austin, Texas, the
housing market has boomed.
Now, you also will hear from our witnesses today, small
business home builders are continuing to press forward despite
their barriers, but it is time to stop hamstringing our best
and our brightest. When small home builders are constrained, It
affects people far--it affects people far beyond the housing
market, and other industries feel the pressure. Local economies
lose momentum and worker mobility becomes restricted. Housing
is a driver of economic growth, and when workers cannot find
affordable homes near their jobs, certain employers struggle to
recruit and maintain talent. Productivity suffers and economic
expansion slows. A shortage of housing does not just limit
where people live, it also limits where people can grow, where
workers can move, and how strongly local economies can compete.
So as a committee, it is our responsibility to look at the
challenges that facing small home builders and bring their
obstacles to light with clarity and with purpose. It is also
our duty to empower the people who build America to do what
they do best. And ur role is to ensure that the committee is a
partner in progress, not a roadblock to it. Just yesterday, the
Ranking Member and I, along with our colleagues, voted to pass
the House-led bipartisan housing bill that we passed out of
this chamber yesterday. We need to work together to ensure that
small home builders can compete, innovate, and deliver the
housing this country is counting on. I want to thank all of you
again for being here. Coming, it is a big deal that you will
come. I look forward to the conversation ahead today. With that
in mind, I now yield to our Ranking Member and my friend from
New York, Ms. Velazquez.
Ms. VELAZQUEZ. Thank you, Mr. Chairman, for calling this
timely hearing on one of the most important issues facing our
economy. Let me also take this opportunity to welcome all the
witnesses and to thank you for being here.
Nowhere is our affordability crisis more evident than in
housing where half of renters are rent-burdened and a quarter
pay more than half of their income. In New York City, our
rental market is out of control. On average, New Yorkers who
rent are paying 41 percent of their income. This isn't a red or
blue state issue either. Cities in states like Texas and
Florida also face rental affordability issues. Similarly,
homeownership is drifting further out of reach. According to
the Atlanta Fed, the salary needed to afford the median home is
roughly $116,000, 36 percent higher than the actual median
income of $85,000. Over just the past 6 years, the median home
price has surged over 30 percent, and elevated interest rates
are keeping many locked into their low in low-rate pandemic-era
mortgages. As a result, an entire generation has been priced
out of home ownership.
According to the National Association of Realtors, the
first-time homebuyer share is now at a record low, and the
typical age of a first-time homebuyer is an all-time high of 40
years old. We are not building enough housing to meet demand.
Experts estimate we lack between 3 and 5 million units
nationwide. Tackling this issue will mean addressing shortages
of both single-family and multifamily housing developments. I
hope this hearing can identify causes and address solutions to
this crisis, including by leveraging the power of small firms
across the nation.
Yesterday, the House began addressing some of those issues
by passing the 21st Century Road to Housing Act, which makes
important reforms to federal housing programs and includes
language I offer on cooperative housing developments and
oversight of monitors and receivers of public housing
authorities. This bill is an important first step, but it is
not the complete answer. I urge the Senate to act quickly and
pass this bill. Yet we must all recognize that we still need
substantial investment in housing programs to tackle this
issue. While the issue, slow housing construction, is caused by
many structural problems, from labor and materials to financing
to land regulations, it is clear that the administration who
campaigned on affordability is making the problem worse.
For instance, this administration's cruel and racist
immigration policies have specifically targeted a large portion
of the construction workforce. As a result, threats of ICE
raids have deterred even documented workers and legal residents
from showing up to job sites, extending timelines and growing
costs. Tariffs enacted solely by the president are adding costs
to building materials, including Canadian softwood lumber,
steel, aluminum, and copper, and even kitchen cabinets and
furniture. These tariffs are inflating prices from foundation
to finish. To make matters worse, the war in Iran has caused
diesel to surge to over $6 per gallon in many states, causing
builders to face additional fuel surcharges in transporting
building materials. High prices and growing inflation threaten
to keep interest rates high, while further straining the
budgets of renters, homebuyers, builders, and sellers.
Just last week, we received inflation data that confirmed
price hikes are once again outpacing incomes, driven primarily
by the president's signature policies, tariffs and the Iran
war. The Kraft Heinz CEO said this plainly to the Wall Street
Journal last week: consumers are literally running out of money
at the end of the month. Meanwhile, the administration is
proposing to gut the very programs, rental assistance,
community development grants, and home investment partnerships,
that help fill the gap between what the market can deliver and
what families can afford. Taken together, these policies and
economic conditions aren't alleviating the housing shortage.
They are making it worse.
Rather than focusing on the issue he was elected to solve,
the president focuses on securing $1 billion in taxpayer funds
for a ballroom and even spending $30 million on an odd bid
contract to paint the reflecting pool. Not to mention spending
$1.7 billion on a slush fund for his insiders and cronies, some
of whom ransacked the Capitol on January 6th. A billion dollars
could build a lot of houses and go a long way toward helping
small businesses fill this gap. I look forward to hearing from
witnesses about how we could better allocate our resources to
address this crisis and make life more affordable for everyday
Americans. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
We will now move to the witness introductions. Our first
witness today is Mr. Bill Owens. Mr. Owens is Chairman of the
Board of the National Association of Home Builders. Mr. Owens
is also the principal of Owens Construction, an Ohio-based
residential construction firm he established in 1982, that is
recognized for award-winning energy-efficient home designs. Mr.
Owen has also held numerous leadership roles across the home
building industry, including Chairman and positions with the
NAHB Remodelers Council, Home Builders Institute, and the New
American Home and Remodel Task Force. Mr. Owens is a longtime
industry leader at the local, state, and national level. He has
served on the NAHB Board of Directors for more than 20 years.
He has previously served as president of the Ohio Home Builders
Association. Mr. Owens is also a Member of the Harvard Joint
Center for Housing Studies Remodeling Futures Steering
Committee and remains active in professional education,
workforce development, and community service along with his
wife, Betsy. I want to thank you again for being here today. It
is a pleasure.
Our next witness is Dr. Ivan Rupnik. Dr. Rupnik is founding
partner of MOD X, a research-based advisory group focused on
accelerating the underutilized housing industry. Dr. Upnick is
also a professor of architecture at Northeastern University.
His research focuses on industrialized housing delivery,
particularly the regulatory and institutional barriers in off-
site construction in the United States. Dr. Rupnick's work has
been featured in the New York Times, and he has presented at
HUD, the Harvard Kennedy School, and the National Housing
Summit. Through multiple HUD-funded projects, MOD X has
produced major policy reports. Their work has identified
regulatory reform as a top priority for scaling industrialized
housing. Dr. Rupnick holds a PhD in architecture from Harvard
University, where his doctoral research examined the
relationship between building design Industrial Management and
Housing Policy, and he also holds a Master of Architecture with
distinction from the Harvard Graduate School of Design and a
Bachelor of Architecture summa cum laude from Louisiana State
University. I look forward to our discussion.
Our next witness today is Mr. Eric Schaefer. Mr. Schaefer
is the Chief Business Development Officer at Falling West
Development, or Fading, sorry, Fading West Development, a
Colorado-based modular home builder focused on providing
affordable, high-quality homes, and he also helps lead Fading
West's innovative modular housing projects focused on meeting
the needs of communities. Mr. Schaefer also plays a key role in
building partnerships with developers, nonprofits, and
municipalities across Colorado, Hawaii, and the broader western
region. Since the company's manufacturing facility opened in
2022, he has helped advance 25 projects resulting in the
creation of more than 500 homes across the western United
States. Mr. Schaffer has testified before the Senate Banking
Subcommittee on Housing, Transportation, Community Development
in 2024 and the House Financial Services Committee on Housing
and Insurance in 2025. He holds a Bachelor of Science in
Communication from Florida State University and a Master of
Divinity from Columbia Theological Seminary. So I look forward
to your testimony.
I now recognize the Ranking Member, Velazquez, to briefly
introduce our last witness appearing before us today.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Our final witness today is Emily DiVito, senior advisor for
economic policy at Groundwork Collaborative, where she manages
the work on the housing crisis. Prior to Groundwork, she was
the director of finance, corporate regulation, and consumer
protection at Roosevelt Institute and a policy advisor at the
U.S. Treasury Department. Her research has been featured in The
Washington Post, The Guardian, and Bloomberg. She holds a
bachelor's degree from Wesley College and an MPA from Columbia
University. Thank you for joining us today, Emily. We look
forward to your testimony.
Chairman WILLIAMS. The gentlelady yields back.
And I want to also say thank you to our witnesses. We
appreciate all of you being here today. Now, before recognizing
the witnesses, I'd like to remind them that their oral
testimony is restricted to 5 minutes in length. That's an
important number here, 5 minutes. If you see the light turn red
in front of you, it means your 5 minutes has concluded and you
should wrap up your testimony. And if you continue on, you'll
hear this. That means you got to stop what you're saying, okay?
I know you'll do fine. So with that in mind, I now recognize
Mr. Owens for his 5-minute opening remarks.
STATEMENTS OF BILL OWENS, CHAIRMAN OF THE BOARD, NATIONAL
ASSOCIATION OF HOME BUILDERS; DR. IVAN RUPNIK, PHD, FOUNDING
PARTNER, MOD X, PROFESSOR OF ARCHITECTURE, NORTHEASTERN
UNIVERSITY; MR. ERIC SCHAEFER, CHIEF BUSINESS DEVELOPMENT
OFFICER, FADING WEST; AND MS. EMILY DIVITO, SENIOR ADVISOR FOR
ECONOMIC POLICY, GROUNDWORK COLLABORATIVE
STATEMENT OF BILL OWENS, CHAIRMAN OF THE BOARD, NATIONAL
ASSOCIATION OF HOME BUILDERS
Mr. OWENS. Chairman Williams, Ranking Member Velazquez, and
Members of committee, thank you for the opportunity to testify
on America's housing supply crisis. I am here today
representing NAHB's Members, most of whom are small businesses
who build 10 or fewer homes per year yet collectively, they
construct roughly 80 percent of all new housing in the United
States. At its core, today's affordability challenge is driven
by a simple imbalance: the nation is not producing enough
housing to meet demand. NAHB estimates a structural shortage of
roughly 1.2 million homes. Vacancy rates remain historically
low, and the resulting supply-demand mismatch has pushed both
home prices and rents beyond the reach of too many households.
To explain why it is so difficult to build enough
attainable housing, NAHB often points to the 5 L's: lending,
lots, labor, lumber, and laws. These interrelated constraints
make clear that the crisis is structural and cannot be solved
by addressing a single factor alone. First, Lending. Housing
production depends on access to capital, and for many small
builders, that means financing from community banks. Credit
conditions remain tight, with borrowing costs elevated,
limiting the ability of builders to move projects forward. We
are encouraged by recent efforts to highlight project-based
working capital options for homebuilders and look forward to
working with the committee and the SBA to ensure these programs
are available to all builders.
Second, lots. A shortage of buildable lots remains a major
obstacle as land development costs continue to rise.
Restrictive zoning, infrastructure limitations, impact fees,
local opposition, and federal permitting delays all constrain
the ability to bring land to market. These challenges are
especially acute for small builders who cannot spend or who
cannot spread high fixed development costs across large-scale
projects.
Third, labor. The skilled labor workforce shortage
continues to significantly limit housing production. At any
given time, there are more than 200,000 open positions in
residential construction. In 2024 alone, labor shortages
prevented the construction of roughly 19,000 homes and added
nearly 2 months to project timelines. Congress can help by
strengthening workforce development programs, expanding
training and career pathways in the skilled trades, and
ensuring legal and efficient workforce access where domestic
labor supply is insufficient.
Fourth, labor and materials. Construction input costs
remain elevated with continued price increases in 2026
compounding the challenges posed by financing costs, labor
shortages, and delays. Even modest increases in material prices
can determine whether a project is viable or not.
Finally, laws, meaning regulation. Regulatory costs act as
a hidden tax on housing production. NAHB research shows that
regulation accounts for nearly 25 percent of the cost of a new
single-family home and over 40 percent of multifamily
development costs. These burdens increase carrying costs and
financing risk. Permitting challenges are particularly
burdensome for small builders. For example, under the Clean
Water Act, the difference between a streamlined nationwide
permit and an individual permit can add hundreds of thousands
of dollars and more than a year in delays, directly reducing
the number of homes that can be built. The bottom line is
clear: there is a supply problem. Small builders are ready to
help meet the challenge by delivering housing in local markets
and underserved communities.
But progress will remain limited if costs and delays
continue to escalate across financing, land, labor, materials,
and regulation. Congress can play a role by advancing supply-
focused reforms that expand access to capital, strengthen
workforce pipelines, increase the availability of buildable
lots, and reduce the excessive regulatory costs and permitting
delays. If we want to make housing more attainable, we must
make it easier and less expensive to build. Thank you, and I
look forward to your questions.
Chairman WILLIAMS. Thank you. The gentleman yields back.
I now recognize Dr. Rupnik for his 5-minute opening
remarks.
STATEMENT OF IVAN RUPNIK, PHD, FOUNDING PARTNER, MOD X, AND
ASSOCIATE PROFESSOR OF ARCHITECTURE, NORTHEASTERN UNIVERSITY
Mr. RUPNIK. Chairman Williams, Ranking Member Velazquez,
thank you. Thank you for the opportunity to testify.
This year I co-authored or published a report from HUD that
examined why the United States has persistently struggled to
industrialize housing delivery while our peer economies have
not. What we found was that much of the work that was done
abroad was first proposed in the United States but never fully
implemented. The industrialization of housing delivery is the
integration of design, off-site production, and on-site
assembly into a coordinated system. Most American industries
operate within this regulatory framework that supports this
kind of integration, including automotive. Housing does not.
In 1968, HUD documented exactly this issue and concluded
that the federal role is to create enabling conditions within
which companies can innovate to address housing affordability.
In response, Congress authorized HUD to pilot a form of
regulatory streamlining called Housing System Certification.
That pilot, Operation Breakthrough, validated this approach
through work in 8 different states and 20 different companies.
Six years later, Congress concluded that the lack of uniform
housing and building regulatory provisions increases the cost
of construction and thereby reduces the amount of housing and
other community facilities which can be provided. The '74
Housing and Community Development Act then produced two
performance-based regulatory reform actions.
The first was the HUD Code, which has been discussed
extensively. The second, the more exciting part for me, was the
establishment of the National Institute of Building Science, or
NIBS, mandated by Congress to continue the work HUD had piloted
developing a performance-based fast track for small innovative
companies to deliver housing. The problem had been identified
and measured, a solution had been demonstrated, an institution
had been established, but what was never completed was
implementation.
Our recent report renewed a call for housing system
certification for 3 concrete reasons. It was proven out at a
pilot level in the United States through Operation
Breakthrough. It has been operating successfully in Japan for
more than 50 years. Today more than 28 percent of Japanese
housing goes through this fast-track route and has serious
benefits. And it is also the same framework that we already use
to govern every other consequential American manufactured
product, automobiles, our aircraft, medical devices, our food,
our pharmaceuticals. A housing system is essentially a product
definition. The design logic, the structural and material
systems, the off-site manufacturing and on-site assembly
processes, quality insurance, and quality control of a defined,
repeatable housing offering treated as a unified whole rather
than a collection of discrete decisions made project by
project.
What defines it as a system is the integration, the design
for manufacturing assembly, coordinated supply chains, serial
production, and continuous improvement. In other words,
industrialized housing delivery. Permitting through this would
be streamlined. Lenders and insurers could rely on the
certification as a basis for underwriting. Code officials would
retain their authority, but exercise it against a known and
tested baseline. Federal programs could utilize certification
for awards and subsidies. This is what's done in Japan. This is
not a proposal to preempt local code officials. It is a
proposal to give them a tested performance baseline against
which to exercise their authority. The savings would come not
from redoing the same approvals in every project.
The quality gains would come from concentrating expert
review at the systems level rather than fusing it across
thousands of individual project reviews. In the U.S., the
strongest endorsement for housing system certification has come
from small vertically integrated companies like my friend Eric
Schaefer here, who's also serving on a technical committee to
support our work. Fading West will be discussed today.
Certification benefits factory, site, and hybrid delivery
equally because what it certifies is the integrated system, not
the technology itself. It also certifies the technology. Some
innovative site builders have also endorsed this regulatory
form for exactly the same reason, including Texas-based JPI, a
major multifamily builder.
MOD X is working with NIBS and a steering and technical
committee of 21 people to develop the standard. We hope to be
completed by December of 2026. And we're happy to say that the
state of Washington is already working to pilot this at a state
level. Todd Beyreuther, who is an industry expert and also the
Chair of the Building Council, is developing this. I wanted to
make this committee aware of this important work, more than
half a century in the making, and I look forward to your
questions and your thoughts about how federal action can
support state, local, and government, and NIBS in helping to
scale. Thank you.
Chairman WILLIAMS. Thank you.
I now recognize Mr. Schaefer for his 5-minute opening
remarks.
STATEMENT OF ERIC SCHAEFER, CHIEF BUSINESS DEVELOPMENT OFFICER,
FADING WEST DEVELOPMENT
Mr. SCHAEFER. Thank you, Chairman Williams, Ranking Member
Velazquez, and Members of the committee for the opportunity to
testify today.
My name is Eric Schaefer, and I am Chief Business
Development Officer for Fading West in Buena Vista, Colorado.
We are a fully integrated design, construction, and modular
manufacturing company focused on the Lean process. The U.S.
faces a crushing housing deficit, and this burden falls on both
national builders and smaller home builders like Fading West.
With little or no innovation in the past 50 years in how houses
are built, Fading West and the modular manufacturing industry
firmly believe that this committee has a vital role to play in
helping small home builders innovate, scale, and actively
participate in resolving our national housing shortage. To
understand the challenges small home builders face, we must
look at how far the U.S. lags in manufacturing adoption. In our
country, modular construction represents less than 5 percent of
all housing. For comparison, in Scandinavia, modular makes up
over 45 percent. We are failing to address the root systemic
causes holding back our construction sector.
First, it is because of a fractured labor pipeline. Forty-
one percent of the current construction workforce will retire
by the year 2031. With fewer skilled trade professionals
available, labor costs will rise and slow project timelines.
Second, the price of residential construction goods has gone up
over 40 percent since 2020. And third, the regulatory burden.
Regulations account for 25 percent of the average sale price of
a new home. And fourth, there are 43,000 individual building
code jurisdictions across the United States, and this makes it
difficult for modular factories to standardize.
Fading West has shown that building homes using Lean
manufacturing principles in our 110,000-square-foot factory has
helped us reduce waste from 30 percent down to 3 percent. We
have over 100 employees who can build a house in less than 10
days in the factory and then complete the on-site work in less
than 30 days for a total of 40 days, far less than traditional
construction. We build homes 20 percent cheaper and 50 percent
faster. We recently built our 1,000th unit in our 4.5 years
since opening. To see this in action, I would like to highlight
a partnership that we have with Rural Homes, a nonprofit
developer in Telluride. In high-cost mountain and rural towns
in Colorado, traditional site building costs are prohibitive
for workforce housing. Together with Rural Homes, we have
scaled a unique public-private philanthropic partnership
blueprint. Under Governor Polis, Colorado has become a modular-
friendly state through initiatives like Proposition 123, equity
funding, and Senate Bill 2409, and the state is streamlining
factory certifications and has slashed red tape. By pairing
donated municipal land, low-cost philanthropic capital, and
Fading West's factory speed of delivery, we are building
workforce housing at prices well below regional and market
pricing.
We are currently building projects all around Colorado, in
Wyoming, in Texas, in Montana, and have signed first contracts
in the Pacific Palisades for families that lost homes in the
fire. We built 85 homes in our Colorado factory and shipped
them to Lahaina for the FEMA disaster relief project in Maui.
We are currently building 24 homes for the Department of
Hawaiian Home Lands (DHHL) for a pilot project in Honolulu for
their beneficiaries. We are also partnering with DHHL to build
a factory in Hawaii which will speed up building and reduce
cost.
To empower small businesses, I offer three recommendations:
provide direct capital incentives for facilities through
federal grants and 0 percent interest loans; to create regional
building codes for different climate zones, which will unlock
standardization and allow factories to flourish; and to
prioritize and reward vertically integrated public-private
partnerships. Housing policy is education policy, it is
economic policy, it is environmental policy, it is
transportation policy, it is community policy. The committee
can empower small businesses to be the master key that unlocks
a new era of attainable housing, vibrant communities, and
thriving local economies across America. Thank you, and I look
forward to questions.
Chairman WILLIAMS. Thank you. And the gentleman yields
back.
I now recognize Ms. DiVito for her 5-minute opening
remarks.
STATEMENT OF EMILY DIVITO, SENIOR ADVISOR FOR ECONOMIC POLICY,
GROUNDWORK COLLABORATIVE
Ms. DIVITO. Chairman Williams, Ranking Member Velazquez,
and Members of the committee, thank you for the opportunity to
testify.
My name is Emily DiVito. I am the senior advisor for
economic policy at Groundwork Collaborative, an economic policy
think tank in Washington, D.C. We face a housing affordability
crisis worsened by existing housing shortages and a failure to
build more homes of all types. Congress is already taking on
barriers to building, such as restrictive zoning, through the
21st Century Road to Housing Act. Such efforts are important,
but zoning reform alone will be insufficient to fix the housing
affordability crisis. Home builders and home buyers face
economic headwinds that Congress must tackle head on. As this
committee knows, small and medium-sized home builders play a
hugely important role in the U.S. housing system.
I would like to highlight two particular cost challenges
for builders that ultimately put housing out of reach for many
families: the rising cost of construction and the high cost of
capital. The Trump administration is driving up the cost of
construction through its mismanagement of the economy,
specifically tariffs on core building materials, as well as
higher transportation costs and higher interest rates due to
the Iran conflict. In the latest Producer Price Index, the
price of goods used in residential construction was up 1.2
percent over the last month and up 6.1 percent from last year.
Higher prices place a particular strain on small builders who
do not have the resources or scale to mitigate tariff costs or
to pass rising transportation costs through to consumers.
The Center for American Progress recently estimated that
higher building costs due to the tariffs will lead to 450,000
fewer homes built over the next 5 years. At the same time, a
lethargic labor market and the Trump administration's
immigration crackdown make it more difficult for firms to find
and retain construction workers, adding further time delays and
additional costs to the home building process. These higher
construction costs get passed on to home buyers in the form of
higher prices.
Meanwhile, just months after DOGE cut staffing at federal
housing agencies, the Trump administration is pulling back on
federal housing funding by proposing the elimination of
programs like Home Investment Partnerships and Community
Development Block Grants. These programs have channeled
millions of dollars to local businesses and community partners,
helping meet the needs of over 2 million people and resulting
in the construction or rehabilitation of more than 1.3 million
units of affordable housing. Let's be clear, these challenges
didn't come out of nowhere. The higher prices we see today are
the result of specific policy choices by this administration
that Congress can rein in.
But even before the price hikes, cost of capital had
already been a major constraint to new construction. Building
the capital stack, the specific debt, the specific blend of
debt and equity required for a given project can be costly for
firms raising capital from investors seeking returns. Small and
emerging developers without the same resources or established
track records of large firms have more challenges securing
construction loans and recruiting investors in the first place.
And even when small developers secure financing, investors
often impose strict repayment schedules and high return
expectations, which ultimately result in higher costs for
consumers.
Congress should target interventions that lower the cost of
capital and make it easier for homebuilders to build to
affordability. First, Congress should allow entities like
Fannie Mae and Freddie Mac to buy and sell construction loans,
especially the tranches of debt costlier for developers.
Existing programs within the Federal Home Loan Bank System
should also be expanded. Second, government should leverage
their borrowing power to help cities and states establish
revolving loan funds that can extend financing with low
interest rates at long maturities to facilitate new
construction. Third, Congress should play a bigger role in
ensuring mortgages are affordable to homebuyers. This can be
achieved through popular policies such as providing low-rate
direct federal mortgages reducing mortgage insurance premiums,
and allowing families to utilize portable mortgages.
Ultimately, policies such as these will make it easier and
cheaper for businesses to access the financing they need to
build more homes. If Congress can lower the cost of
construction and the cost of capital, more builders, especially
small ones, will be able to meaningfully expand the housing
supply at lower prices, which ultimately means more homes that
working families can afford. Thank you, and I look forward to
your questions.
Chairman WILLIAMS. The gentlelady yields back.
We will now move to the Member questions under the 5-minute
rule. I recognize myself for 5 minutes.
Mr. Owens, as a Chairman of the National Association of
Home Builders, you spent more than 4 decades in the residential
construction industry and have seen firsthand how the
regulatory landscape has evolved in the local, state, and
federal levels. And small home builders play a critical role in
meeting housing demand. But many say increasingly complex and
costly requirements have made it harder to build homes
efficiently and affordably. So my question would be, to give a
small homebuilder a fair chance to succeed, how important is it
to reduce unnecessary regulations? And over the years, have
these regulations been easier to navigate or increasingly
burdensome for some homebuilders?
Mr. OWENS. Thank you for the question, Chairman. That
definitely strikes home. I mean, we deal with this every day.
The, you know, what we've done with or what we've dealt with
over the 4 decades of increased regulation just isn't from a
code or a land use point of view. It has nothing to do with any
one particular item. But when we, when we talk about a
combination of factors at the land development phase, we talk
about issues with restrictive zoning, with impact fees. And
again, we understand this isn't all federal mandated. This can
be state as well as local regulation as well.
But then when we look at infrastructure constraints, even
the NIMBY-ism, the local opposition, can, can add in, you know,
an interesting kind of twist into our ability to build. And I
think what we're trying to do right now is to just recognize
that, and as we bring this to Congress, and I knew at some
point I probably would be able to share this with you all, is
there's not one particular item as far as regulation goes,
there's not one thing in particular that if we did away with
today that we would be in a much better place tomorrow to
provide attainable and affordable housing. It is, I call it
death by a thousand cuts.
But every one of these adds another layer of cost that we
simply just cannot absorb, and that ultimately is going to be
passed on to the consumer much like everything else. When our
costs go up, that is a direct impact then on the eventual home
buyer.
Chairman WILLIAMS. All right. Thank you.
Dr. Rupnick, as a professor of architecture and a leading
technical expert in off-site construction and building
innovation, you spent years studying how design, manufacturing,
regulation interact in the housing industry, and through your
work with MOD X, and your collaboration with the National
Institution of Building Sciences, you've exploring ways to
modernizing housing construction and reduce regulatory barriers
that slow the development. So offsite and modular construction
are often viewed as promising solutions to improve efficiency,
lower costs, and expand housing supply, but they also face
significant challenges because of codes, permitting, and
inspections, et cetera. Standardization. So my question is,
quickly could you walk us through some of the innovations,
technologies, and regulatory reforms you are exploring to make
the process more scalable and more manageable?
Mr. RUPNIK. Thank you, Chairman, for that question. I think
that there's a lot of interesting technologies out there, but
the reality is, if we look globally, light wood frame
construction, an American form of construction, is actually
seen in many countries as an innovative form of construction.
So I say that there are a lot of innovative technologies. The
innovations that we're excited about are in the code compliance
space. And that's what we're really advocating for because as
Mr. Owens pointed out, there are a lot of regulations. We can't
point to one of them, but what we can point to is the structure
of code compliance.
So we now have a smaller number of model codes that are
then adopted by states and then modified, adopted by counties
and modified, and then actually interpreted project by project.
The multiplication of what actually a company has to deal with,
small or large, is infinitesimal. The investment in
streamlining code compliance is the single tool that we think
would benefit both conventional builders and offsite builders.
And that is something where we've seen AI and other digital
tools used in this space. And every industrialized economy has
had the difficult process of saying our code compliance system
is fragmented. It doesn't work. It doesn't work for
conventional, doesn't work for new technologies, and we need to
reform it.
Chairman WILLIAMS. Thank you.
I now recognize the Ranking Member for 5 minutes. My time
is up.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Ms. DiVito, Housing costs are at the root of the
affordability crisis, putting significant pressure on family
budgets and limiting the ability of people to save money or
even meet their basic needs. Can you outline some of the root
causes of the housing shortage?
Ms. DIVITO. Thank you for the question. For decades, the
U.S. has underinvested in housing. Construction never really
recovered after the Great Financial Crisis, and since then
we've only had persistent labor and construction shortages. At
the same time, as my testimony mentioned, acute price hikes are
making it worse as builders and contractors contend with high
prices on core construction materials from tariffs. And one of
the biggest underlying challenges we face today is the high
cost of capital that makes it incredibly expensive, time-
consuming, and overall difficult for developers, especially
small firms, to build affordable housing. And this is why I
believe that if we want to fix our housing affordability
crisis, we have to fix our housing financing system.
Ms. VELAZQUEZ. Thank you.
Mr. Owens, the National Association of Builders testified
before the Financial Services Committee that uncertainty from
tariffs was constraining investment. What impact do Section 232
tariffs on lumber, steel, and aluminum, and kitchen cabinets
and finished wood products, as well as potential future 301
tariffs, have on small builders?
Mr. OWENS. Thank you very much for the question. Our
research through our econ team has shown a fairly insignificant
burden when it comes to tariffs. Somewhere around--when we look
at total building cost, everything that goes into the home,
we're estimating that about 7 percent of building materials
that go into that home are actually imported. So we're
somewhere under 10 percent of our net costs here. So, you know,
currently with the administration working toward the American
First environment, that's influencing some of our work, but it
is fairly minimal.
Ms. VELAZQUEZ. And you disagree with the member of the
National Association of Home Builders that tariffs are
constraining investment?
Mr. OWENS. I don't think there's any question that they're
having some impact.
Ms. VELAZQUEZ. Okay. Wouldn't you agree that these tariffs
have increased the cost of housing? You're saying no?
Mr. OWENS. Slightly.
Ms. VELAZQUEZ. Okay.
The president has proposed significant cuts to programs at
HUD. Ms. DiVito, what are some of these cuts? How do they
impact housing affordability?
Ms. DIVITO. That's right. The president has been trying to
eliminate some of the nation's most flexible housing programs,
including the Home Investment Partnerships Program and
Community Development Block Grants. In the president's proposed
budget for fiscal year 2027 that would cut funding for the
Department of Housing and Urban Development by roughly $11
billion, or 13 percent. Cutting this funding means that these
communities and businesses that are counting on these programs
for the flow of capital won't get it and may not be able to
build as many homes or at rates that families can afford.
Ms. VELAZQUEZ. Do you agree that if the president and
Members in Congress are serious about addressing housing
production, that they will be increasing not decreasing HUD's
housing production programs?
Ms. DIVITO. Yes, ma'am.
Ms. VELAZQUEZ. On both sides of the aisle, Ms. DiVito, many
of us recognize that NIMBYs have abused land use regulation to
slow the construction of new housing starts, but solving that
issue is only part of the problem. Why is expanding government
options for access to capital so important for new
construction? And particularly for small builders.
Ms. DIVITO. Thank you. Yeah, I mean, I think everybody on
the panel agrees that there's no doubt that zoning restrictions
and complex permitting processes have worsened our housing
affordability crisis. Unfortunately, though, I feel strongly
that fixing zoning alone will not dissipate the underlying
costs of securing financing, which is one of the major drivers
of the affordability crisis we see today.
Ms. VELAZQUEZ. Thank you.
Mr. Owens, to that end, your testimony mentioned exploring
SBA financing to help get more access to capital for small
developers. I am working on a bill to modernize the 504 CDC
program to support renovation of mixed-use developments for
commercial and residential units. Would this be a provision you
will support?
Mr. OWENS. I think we'd want to look into that a little bit
more, but I think that we're absolutely in alignment and very
hopeful that the Small Business Administration grant process,
you know, the lending process will help us out. We represent
the small builders, and anything that we can do--capital is
always an issue for us, not just in mainly the carrying cost of
the business more so than just actually financing the land.
Ms. VELAZQUEZ. Thank you. Oh yeah, my time expired.
Chairman WILLIAMS. The lady's time is up. She forgets that
sometimes.
I now recognize Mr. Meuser from the great state of
Pennsylvania for 5 minutes.
Mr. MEUSER. Thank you, Chairman. Thank you all. Very
interesting and important discussion and, and hearing here. We
all agree construction costs, regulatory delays, outdated
zoning constraints fuel decades of underbuilding. Perhaps as
many as 3 to 4 million single-family homes we need to build and
make available. Small home builders play a vital role, Mr.
Owens, as you are clearly bringing out, as you did in your
testimony. Earlier this week, as has been mentioned, we did
pass a very bipartisan amendment to the 21st Century Road to
Housing Act that will address many of these housing shortage
issues by reducing unnecessary barriers to new home
construction, modernizing HUD programs, allowing banks to more
freely deploy capital, and have some restrictions on
institutional purchases of single-family homes. Not the
building of single-family homes, but the purchasing of them.
So Mr. Owens, very intrigued by your testimony. You had
some real good ideas in there. I like this lending lots, labor,
lumber, laws. I mean, that's good. Sums things up and helps us
focus, I think.
The banking, as the Ranking Member was just talking about,
you know, our Housing Act allows banks to lend more to finance
home construction. This should make a difference. It should
double it. It could actually double it according to the intent
of the law anyway. And I am intrigued, intrigued about the idea
of expanding 7a loans for home construction, maybe double it.
Right now it is at $5 million. We bring it up to $10 million. I
mean, one builder alone, perhaps that could equate to, well,
you do the math, 13, maybe 14, 15 new homes. Your thoughts on
that?
Mr. OWENS. Thank you, sir, for the question. You know, for
us, access to capital is a must. We absolutely cannot build
without that. So when we talk about the possibility, as I said
earlier, we're encouraged by the SBA 7a or 7b program as a way
to finance direct costs. I think there are limits, though, to
that. What we had seen, for example, phased development would
be excluded from that, and actual project-based working capital
would be something that I think I understand would have been
excluded. I think when we're looking at the overall landscape
of construction financing, larger builders, I think, have more
varied access to different capital pathways. We represent the
small volume builders. Our average builder is building 10 or
less homes a year.
Mr. MEUSER. The ones I know. Yeah, sure.
Mr. OWENS. Yeah. So that's the one thing right now that
we're looking at is what are some means that these smaller
builders would have access to capital? And that's why we sort
of are, we're encouraged by some of your discussions with the
SBA on this.
Mr. MEUSER. And the SBA would be, I think, more effective,
maybe faster, than the HUD programs that exist.
Mr. OWENS. It may be.
Mr. MEUSER. Okay. So Dr. Rupnick, well, first off yeah, Dr.
Rupnick, the 21st Century Road to Housing bill, the regulation
from a regulation standpoint, or any aspect of that bill. Could
you give me your feedback on that, some of your thoughts?
Mr. RUPNIK. I haven't studied the specifics of it, but I
think the issue is that we have not yet really understood,
based on the conversation today, where the cost is, because
we're talking about the cost of regulations. We're not talking
about the structural cost of our code compliance. So that, I
think, from what I've seen in the bill, and I haven't spent as
much time as I'd like to because it has been changing. All I
would caution is that from our research from 20 years, it is
really code compliance, not the regulations themselves, that
have been a burden in the U.S. Also in Pennsylvania, which has
a very strong modular sector. What I don't see is specific
tools for really understanding first and then assessing those.
And that's where I think we really need to understand before we
even allocate funding, really understand the hidden costs of
our code compliance regime.
Mr. MEUSER. Okay, thank you.
Mr. Schaefer, any feedback you can provide on the on our
Housing Act?
Mr. SCHAEFER. Yeah, certainly the innovation for modular is
the huge plus that we see in cutting the red tape which is big
for us. If entitlements take 12 to 18 months before you can
even build a house, a lot of times in affordable housing
projects, by the time you get to the entitled stage, it doesn't
pencil anymore. So we can't even do the project.
Mr. MEUSER. Thank you very much. I yield back, Mr.
Chairman.
Chairman WILLIAMS. The gentleman yields back. I now
recognize Mr. McGarvey from the great state of Kentucky for 5
minutes. Thank you, Mr. Chairman.
Mr. MCGARVEY. Mr. Owens, in your testimony, you opened up
and said there were a shortage of 1.2 million homes in this
country. I think that number could be low. But regardless,
we're all agreeing that we are millions of homes short in this
country. And I think this is really important, because one of
the things we talk about here in the Small Business Committee
is the American dream. The American dream, you can work hard,
you can provide for your family, you can leave the world a
little better than you found it, and you can put your kids in a
better spot than you were in. And I think owning a home is a
foundational cornerstone of this American dream. We still know
that owning a home is a generational wealth a home builder, it
is an asset you can pass on.
But when we're talking about building homes, I want to talk
about what people are going through right now when they want to
buy a home, because it is far from easy. So I wanted to run the
numbers a little bit for you. I am from Louisville, Kentucky,
and I was looking at my town, Louisville, Kentucky, and I
wanted to find a home that was $250,000. Why? I wanted to make
the math easier for me. So I got on Zillow and found
immediately 4 homes listed for $250,000, one in Shively, one in
Okolona, one in Germantown, one just east of J-Town. All have 2
bathrooms. One of them has 2 bedrooms, the other 3 have 3
bedrooms. 3 of them are between 1,200 and 1,400 square feet.
One of them was 2,100 square feet, right there in Louisville,
Kentucky. $250,000. Okay, so the area median income for
Louisville, Kentucky is about $89,000 annually for a 4-person
household. After taxes, that's about $65,500. So that shakes
out about $5,500 per month that you're bringing home after
taxes. If you want to buy a $250,000 home, let's pretend, and I
say pretend because 50 percent of Americans don't have access
to $500 cash. Let's pretend that you can put $50,000 down on
this home. That's 20 percent. I told you I'd keep the math
easy, 20 percent.
Now, you're going to look at a $200,000 mortgage. Current
interest rate, 6.16 percent fixed on a 30-year mortgage. That's
going to cost you $1,400 a month. That is $16,800 per year. Now
your 65.5 is down to $48,700. Okay, let's say you're a young
family of 4, you got 2 kids. Childcare. We all know what this
looks like. In Louisville, Kentucky, the average cost, that's
going to put you at $380 per week, $1,500 per month, $18,000
per year. Now, that is down to $30,700 that you are bringing
home after you've got your mortgage, after you've got your
childcare. Bear with me. We know what grocery prices are doing
right now. Just walk through the grocery, walk through a Kroger
in Louisville.
So I am going to go conservative. I am going to say for a
family of 4, you're spending $250 per week for all 4 of you.
That's $13,000 a year. Now you're down to $17,700. But guess
what? We haven't talked about taking care of these kids yet.
Health care, especially with what Trump did to the Affordable
Care Act, is now $1,800 per month on average in Louisville,
Kentucky. That's $21,600 per year. Guess what? You are now
minus $3,900. That's your family of 4 in a $250,000 home. You
are $3,900 underwater. And what have we not talked about? We
haven't talked about your utilities. You haven't talked about
your water, your cell phone bill, your car payments, your
insurance, your gas, which you can just drive--is $4.40 when I
left Louisville on Bardstown Road this week. You're $3,900.
And guess what? We haven't even talked about what the
actual payment on the home is. In the above scenario, we had a
30-year mortgage. By the end of it, you will have paid $250,000
in interest on that $200,000 loan. So we got to get the
affordability under control here. And one of the ideas has been
floated, Ms. DiVito, is the idea of a 50-year mortgage. And I
want to talk about what impact that has on affordability and
what you think about what that would do for families.
Ms. DIVITO. Thank you for the question. Yeah, the 50-year
mortgage, I think, is a misguided attempt to make it seem like
it is providing relief for homebuyers without fixing the
underlying problem. On a 50-year repayment plan, families would
end up spending significantly more on interest over the
lifetime of their loan and build equity much slower than other
families. I don't think that Americans want their debt to last
longer. They just want their housing to be more affordable.
Mr. MCGARVEY. Yeah, so you're going to pay significantly
more over the cost of 50 years, and even if you're able to buy
something a little bit cheaper up front, we're still looking at
this math. You're still in a $250,000 $500,000 home, you're
still in the red. And guess what? Even if you think you can buy
it for a little bit cheaper up front, look at what the tariff
policies are doing right now. You're looking at building and
material prices up 3.5 percent year over year.
Mr. Owens, have you seen this in your business, that the
cost of lumber and materials right now is rising?
Mr. OWENS. We have to a certain extent, but it is more in
the metals, I think. As of recent, we've seen some stability in
the lumber prices. Certainly from the, you know, the peak there
during COVID Yeah.
Mr. MCGARVEY. And this, this rise in cost is making it
harder to build homes. It is making it harder to find the
American dream on every level. And I think we have to address
the affordability crisis and start talking about this. Mr.
Chairman, I yield back.
Chairman WILLIAMS. Yields back.
I now recognize Mr. Cisneros from the great state of
California for 5 minutes. Thank you.
Mr. CISNEROS. Thank you, Mr. Chairman. I want to thank you,
the Ranking Member, for bringing us together for this important
hearing on housing. You know, I represent a district in
Southern California in the San Gabriel Valley, and I don't even
know where you can find a house for $250,000 anywhere there. It
is just not possible, right? And the rising cost just continues
to add, right? And look, I look at it in a very simple way when
kind of looking at economics, and it is supply and demand,
right? We need a lot more supply in order to help bring down
the cost of housing. And it is not just single-family homes
people could afford, but also renting rentals, right?
And then even as my I think of my grandmother years ago as
she started to age, she moved into senior citizen housing that
provided opportunities for more people to kind of move in there
as well. And look, my district is not that far away from where
the Eden fires were last year, which only adds to the shortage
of housing there. And so, and now those people are going to
need to build, and it is going to cost them even more as
insurance companies continue to make higher demands on the way
that construction happens and what they can do. And look,
there's been a lot of great innovations there, I think, to kind
of help and prevent fires or to help the homes become more
stable during those times. But it comes at a cost as well,
right? Not only at a cost to the owners of these homes who are
going to have to rebuild, but also it is going to be rising
insurance costs as well. So we definitely need to help, I
believe, our home builders kind of do more. As you say, free up
capital so that they can build more.
So, Ms. DiVito, I am going to ask you something about that
kind of intrigued me in your opening statement there, is Fannie
Mae and Freddie Mac providing construction loans to companies.
What do we need to do in order to make that happen?
Ms. DIVITO. Thank you for the question. That's right, I
think the government-sponsored entities Fannie Mae and Freddie
Mac should be expanded to allow the, the securitization of
construction loans. This will functionally spread risk for
investors and free up capital. I think that could be an
important way to make sure that already existing private
capital out there makes its way to small and emerging
homebuilders.
Mr. CISNEROS. Okay. So would that take--I guess it would
take legislation from us in order to make that happen?
Ms. DIVITO. Oh, yes. I apologize.
Mr. CISNEROS. Okay. No. All right. I would love to work
with you on that and see how we can kind of move forward and
really kind of find a way to make that happen.
Ms. DIVITO. Fantastic.
Mr. CISNEROS. Great.
Mr. Owens, you're from Ohio and you're from that area, and
I don't really know what the workforce what it is like over
there, but I know what it is in California around homebuilders.
And it is an immigrant workforce, right? A lot of people
immigrate here to the United States and they get into this
industry and they've become a very valuable resource to our
construction companies out there that are building homes. But
unfortunately, the president has asserted that these mass
deportations are going to help free up jobs, actually, when I
think it is actually done the opposite.
But what are you hearing from your home builders or the
people in your association out west? What impact has these ICE
raids and Border Patrol raids had on the workforce there out
west, like in California and in other areas across the country?
Mr. OWENS. Thank you for the question. You know, the labor
shortage existed way before we had the immigration crackdown.
We lost, I think, about 1.5 million construction-related jobs
during the great recession. So I think it is very localized,
how you pointed it out. We see that a little bit. I build in
Arizona as well, and we've seen this being a little bit more
localized, but it has disrupted some of local operations, but
we don't see that headwind, if you will, as a severe constraint
right now in housing supply.
Mr. CISNEROS. Well, I feel like I am hearing different from
some of the home builders I talked to out west, but it
definitely is having an impact. Look, I am with you. I, again,
I think we need to figure out ways so we can increase housing,
whether it is modular housing. And I don't know how that would
kind of really work. Like you said, there are a lot of
restrictions, and California does have restrictions, especially
around earthquakes and things like that. But would love to meet
more with all of you to kind of find out you know, how we can
make this work, right? How we can have more access to capital
and how we can, you know, make things more available so that we
can increase that supply number to help bring down the cost.
But with that, I yield back. Thank you.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Jack from the great state of Georgia
for 5 minutes.
Mr. JACK. Thank you very much, Mr. Chairman. And if I
could, I will start with Mr. Owens. Thank you for your
testimony today. Could you walk this committee through the
cumulative impact federal regulations, whether environmental,
permitting, labor rules, energy codes, or financial reporting
requirements, have had on the final cost of a home for an
average American family trying to buy their first house?
Mr. OWENS. Thank you for the question. As I mentioned
earlier, I think it is, it is, it is just, it is an aggregation
of a lot of different cost impacts that come in. We could talk
from the federal point of view, I think, about the wetlands
permitting process. Perhaps when we look at permitting reform,
that might be a possibility too that would give us some, some,
some relief. When we looked at individual permits versus
nationwide permitting, if we stayed on the Clean Water Act and
the compensatory, pardon me, that's a mouthful, the
compensatory mitigation reform that might be helpful for us.
I think again, when we go back in and we look at some of
the OSHA regulations that are applied at the federal level,
when we look at the heat compliance standard, the reporting,
the electronic reporting requirement, again, we represent the
smallest core of the, of the home builders. We don't represent
the nation's largest home builders. That, you know, our
builders are very much rooted in this small business
environment. And that's where we look at some of these costs
that might be able to be absorbed by the larger builders,
particularly in the land development end of things. These are
things that are almost prohibitive for many of our smaller
builders to do any land development at all right now.
Mr. JACK. Your testimony indicated that you estimate, I
believe, is it 25 percent of the cost of a home is due to
regulations? You want to comment on that a little further?
Mr. OWENS. Sure. I think if my numbers are correct, I think
through the land development phase it is about 10 percent, and
I think we're a little bit north or more than 13 percent of the
cost actually during, during construction. That make up that,
that 25 percent cost of regulation and fees above sticks and
bricks essentially. And it is even more than that around 40
percent in the multifamily.
Mr. JACK. Thank you. Could you comment, this week the House
took action on housing, as you saw, no doubt, a few days ago,
actually just yesterday, if I am not mistaken. Could you
comment on how that's going to help Americans achieve that
American dream, buying their first home and helping their
families grow?
Mr. OWENS. Yeah, I very much appreciate that question
because that's something that the effort that Congress has
made, I think, is going to go a long way to really supporting
what we feel is, you know, completely underserved housing
inventory right now. I think one thing, although a little bit
controversial, but in the end, again, because we don't
represent institutionalized investment, removing the 7-year
forced requirement to sell build-to-rent properties was
something that is very, very important to us because that's
about 10 percent of the overall addition to the inventory on an
annual basis at this point. I think also, too, that the Road to
Housing, the House version, increased stronger land use
reforms, enhances multifamily finance tools, creates some new,
new renovation programs, and I think one of the most important
things that really helps the small builder contingent out there
is it provides some regulatory relief for the community banks
to get a little bit more flexibility where we typically go for,
for our money to build these homes.
Mr. JACK. We often talk in this committee about workforce
development. I am honored to Chair the Subcommittee on
Workforce Development, thanks to our Chairman's appointment of
myself in that capacity, and would welcome in these closing 50
seconds you talking about what more Congress can do to help
ensure we've got a pipeline of skilled employees and folks
coming out of trade schools to help build these homes.
Mr. OWENS. I'll be brief. Maybe we can circle back to it.
The CONSTRUCTS Act certainly supports career tech schools as a
primary alternative to traditional 4-year. We absolutely need
your help on a program that started back in the mid-'60s, the
DOL Job Corps program that's administered through the
Employment and DOL's Employment and Training Administration,
and probably a couple other ideas.
Mr. JACK. Thank you.
Well, Mr. Chairman, I appreciate you convening this hearing
today. It was timely given everything else that happened in the
House this week. And with that, I yield back, sir.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Olszewski from the great state of
Maryland, for 5 minutes.
Mr. OLSZEWSKI. Thanks so much, Chairman Williams. Thank you
also to Ranking Member Velazquez, to my colleagues on the Small
Business Committee, and to Thank you to our witnesses for being
here today.
I believe that we all know that tackling the housing crisis
in America is a top priority for Members of Congress across the
aisle and across this committee. To be clear, America is facing
an affordability crisis, and America's affordability crisis
begins with housing. If you can't afford a roof over your head,
little else matters. Unfortunately, this is a crisis that is
exacerbated by President Trump's stunning ability to so easily
turn his back on a promise that he made to lower costs for
Americans on day one. President Trump said it himself, quote,
``I don't want to drive pricing of--I don't want to drive
housing prices down,'' and quote, ``I don't think about
Americans' financial situation,'' when referring to impacts
from the still unauthorized war with Iran.
Trump's war of choice has also increased mortgage rates to
unattainable levels for many Americans who are also grappling
with gas prices of $4.50 per gallon or more across the country
while inflation surges to the highest level it is reached in
nearly 3 years. As I've pointed out in this committee before,
99 percent of Americans are paying more out of pocket, in some
cases much more than they were under Trump before Trump 2.0. I
think my colleague Mr. McGarvey did a good job of going through
some specifics. I don't know how anyone can call this a win for
America.
Unlike the president, lowering costs for my constituents
and the American people is my number one priority. When it
comes to housing, more than half of Maryland families who rent
their homes are cost burdened, which means they spend more than
30 percent or more of their income on rent and utilities. The
share of Maryland households able to afford the median-priced
home is also less than half. Alongside these unattainable
realities to simply live in a home, the overall cost to build
out our housing supply across the country has reached historic
highs. The costs of material and labor have increased
significantly. I want to thank the National Association of Home
Builders for pointing out the impact of the tariffs, which have
alone are projected to cost, raise the cost of imported
construction materials by billions of dollars.
And before I turn to questions, I'll just conclude by
saying this, we must view housing as a workforce issue. Without
enough housing to accommodate job growth, housing prices
increase, which pushes out current residents and deters
prospective residents, only serving to slow economic growth. We
must work to address attainability as a holistic problem, and I
look forward to discussing what policies can help small
homebuilders who need support from Congress at this time.
Ms. DiVito, I'll start with you. For much of our history,
small builders were able to obtain loans from local financial
institutions for homebuilding, but that access to capital has
become more constrained in recent years. How can the U.S.
government get more financing in the hands of small builders
and contractors?
Ms. DIVITO. Thank you for the question. That's right.
Getting more financing into the hands of small builders is
vitally important to relieving the crisis. I think the federal
government is well positioned to expedite that effort. We
discussed, I think, allowing the government-sponsored entities
to buy and sell construction loans. There are some existing
programs within the Federal Home Loan Bank System that I think
could be better utilized. And then finally, filling the gap in
financing for needed projects that the private market is
reluctant to fill or for which the private market would charge
exorbitant, exorbitant returns are, I think, all required
tools.
Mr. OLSZEWSKI. Thank you.
And Mr. Owens, I know that builders can occasionally gain a
higher profit by building on a building with more square
footage or adding more square footage, which can price out
younger first-time homebuyers looking for a starter home. What
do you think can be done to encourage the building of smaller,
more affordable starter homes and multifamily units to help
have a spread of a diversity of housing options?
Mr. OWENS. Again, being proud to represent the nation's
small volume builders. I think that we follow the market. One
thing that we have learned, and there's such little spec
inventory, if at all, from our builder contingent. We've become
a lot more custom builders, infill builders. We, you know, I
think what we can do is to just simply say we're going to
follow whatever makes sense for our buyers because we're
basically building one at a time. And saying that, there is a
sensitivity to these overall costs. The worst thing we can do
is build something that people can't afford. We pay a lot of
attention now, too, to the operating costs of a home. What is
it once that house is built to your--I am sorry, an earlier
point of how expensive it is to actually maintain that house
and to have the monthly utility costs factored into that.
So I think it is incumbent upon us, again, we're, we're
trying to be and always have been part of the fabric of these
smaller communities. We're in every community in America versus
the larger of the nation's builders that, that pretty much
handpick and select their market. So we have to be very
responsive to not only what the costs are but also to provide
the proper product that people can afford.
Mr. OLSZEWSKI. Appreciate those responses.
Thank you, Mr. Chairman, for having this hearing. With
that, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. McIver from the great state of New
Jersey for 5 minutes.
Ms. MCIVER. Thank you so much, Chairman, and thank you to
our Ranking Member for holding this hearing today. And thank
you to each one of our witnesses for being here today.
America's housing crisis is getting worse by the day.
Thirty years ago, the average age of a first-time homebuyer was
28 years old. Today, that age is 40. Homeownership is quickly
becoming a far-off dream for our younger generation. Reenters
are being hit hard as well. Half of them are spending so much
on rent that they have little left for anything else. Families
across the country are being pushed out of stable, affordable
homes, all while the construction of new homes is dwindling.
What the nation needs now are more initiatives like those taken
in my district in New Jersey's 10th, where we had nearly 200
new affordable housing units built last year, helping families
keep a roof over their heads.
The Trump administration's economic policies have only made
these problems worse. Inflation has spiked to the highest level
in 4 years, driving up costs all around the country. Today, gas
is high, grocery prices are high, health insurance is high,
prescription prices are high, utility bills are high. The list
goes on and on. These price increases leave millions of
hardworking Americans with nothing left over for savings after
paying bills, ensuring the dream of homeownership remains even
further out of reach. If we are serious about closing America's
housing gap, we need policies that actually lower these insane
costs and expand the supply of affordable homes.
Ms. DiVito, thank you for your testimony today. Very
enlightening. And you talked a little bit about this today.
Home buying is at its lowest level since the mid-1990s, while
nearly half of the renters spend a third of their paycheck on
rent. From your perspective, can you elaborate on what are the
biggest drivers behind the worsening of the housing
affordability crisis families face today?
Ms. DIVITO. Thank you. Yes, in addition to the acute
pricing challenges that this committee has covered and is well
aware of I think the trend of wealthier homebuyers purchasing
larger and larger homes, and therefore especially large home
builders being incentivized to build them is a big problem.
Today it is increasingly challenging for young working-class
families to find, but certainly to afford a home.
Ms. MCIVER. Yeah, especially when you're being beat out by
cash prices. That is a big deal. Despite how dire the housing
situation is today, the Trump administration is still finding
new ways to make it worse, unfortunately. We have learned that
the administration is preparing to privatize Fannie Mae and
Freddie Mac, which are critical to keeping the mortgage rate
stable, the mortgage market stable. How would this
privatization affect first-time or low-income homebuyers?
Ms. DIVITO. So since the great financial crisis, Fannie and
Freddie have been under government conservatorship. And their
sort of operating model and overarching priorities have shifted
from just serving shareholders or considering shareholder
interests and returning profits to public interest. With the
privatization, that could shift. And capital could be
restricted, become more expensive, and shareholders would
certainly benefit with some pretty sizable windfalls.
Ms. MCIVER. Yeah. Another thing too that I am hearing a lot
of homeowners talk about is around insurance costs, right? That
has been a big, you know, rising cost as well. How are
increasing insurance premiums and climate-related risk
affecting affordable housing projects and smaller home
builders?
Ms. DIVITO. Yes, thank you. I mean, climate change is
getting significantly worse by the year. I am from Florida and
we have suffered many hurricanes that have wiped out entire
communities, preventing them from moving back into their homes
for months at a time. All of these climate risks just add
insurance costs onto the cost of a home as increasingly
insurers grow concerned about potential payouts and then
certainly actually have to pay out more and more as catastrophe
hits U.S. communities.
Ms. MCIVER. Yeah. Well, thank you so much for that.
You know, I appreciate everybody's comment and, you know,
expertise on this. I think we definitely have to look at this
issue as something that is a multifaceted, and it needs
multifaceted solutions. It is not a one-all fix-all. And
lastly, I think it is crazy too when you speak to a lot of
young people these days who are paying $3,500 for studios but
unable to get approved for a mortgage for a home. It is just
incredibly crazy. And we need to really take a real strong look
at this country and where we're headed and where we are
currently at right now.
With that, I yield back, Mr. Chairman. Thank you.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Dr. Morrison from the great state of
Minnesota for 5 minutes.
Ms. MORRISON. Thank you so much, Chairman Williams and
Ranking Member Velazquez, for holding this important hearing.
And thanks to our witnesses for being here and for your
testimonies.
I think we all agree that the cost of housing is too high
due to shortage of housing supply. We've seen housing prices
skyrocket and families are being forced to spend more and more
of their income paying for a place to live. Both renting and
buying are increasingly unaffordable, and unfortunately, many
of the administration's policies are only worsening this
affordability crisis. The 21st Century Road for Housing Act is
an important step toward addressing our affordable housing
program, but the administration's policies continue to create
serious headwinds. The Trump tariff policies and rising
inflation are causing the cost of building materials to
continue to increase, and of course, the terror of Trump's mass
deportation policy is worsening the labor shortage in the
construction industry.
Ms. DiVito, during your testimony, you mentioned that over
half of builders reported rising inflation and the cost of
building materials are significant problems they faced in 2025.
You also highlighted that small builders are disproportionately
impacted by the high price of building materials. Could you
elaborate on why the tariffs imposed by the Trump
administration hurt small builders more than large builders and
put them at a greater disadvantage?
Ms. DIVITO. Thank you. Yeah, that's right. Even before the
war in Iran and some of the tariffs went into effect, inflation
was persistently above the Fed's 2 percent target. These broad
pricing pressures make homebuilding significantly more
expensive. Small builders often don't have the same kind of
resources or margins to shift supply chains or stock supplies
to defray these costs and end up either absorbing them or
reducing production.
Ms. MORRISON. So how do small builders navigate the
uncertainty around these tariff--these ever-changing tariff
policies?
Ms. DIVITO. I think we're seeing that it is very
challenging to. There is a lot of uncertainty in obviously the
economic policy environment and especially the fiscal policy
space. And so uncertainty about interest rates is driving
mortgage rates up and the cost of capital becomes more and more
expensive. There have been many vacillations of tariff policies
for particular goods, which just creates more disruption and
more concern about being able to consistently plan for the
future.
Ms. MORRISON. Thank you.
You know, I have the honor of representing Minnesota's 3rd
District, and I've been hearing from small business owners from
across my district and the greater Twin Cities metro area about
the devastating impacts of Operation Metro Surge on their
businesses, with businesses across the Twin Cities losing over
$610 million in revenue because of it. Foot traffic was down,
staff were afraid to go to work, and some businesses were
forced to close. We have an ongoing labor shortage that we've
discussed some this morning in the construction industry, with
contractors reporting that the shortage of skilled labor is one
of their top issues and a leading cause of delays.
Ms. DiVito, I am returning to you on this one. How have ICE
raids worsened our existing construction labor shortage, and
what are the implications for housing affordability?
Ms. DIVITO. That's right. The ICE raids and mass
deportation efforts that the president has made a priority for
his administration create a huge shock to the construction
labor market that had already been suffering from shortages.
Immigrant workers comprise a large percentage of, of that
workforce, especially of the construction trades. And ICE raids
and threats of deportation are reducing their ability to show
up. It is having a chilling effect. Many folks are scared to go
to work. And then, of course, some are being specifically
targeted for deportation. So builders, especially small
builders, have reported many incidents of disrupted work, which
just adds time delays and a, and a general inability to find
and retain construction workers.
Ms. MORRISON. Thank you. And then lastly, you know, the
housing insurance industry is facing substantial pressures.
You're from Florida. From the escalating frequency and severity
of extreme weather events, largely driven by climate change
leading insurers to either increase premiums or exit high-risk
regions altogether. How does the, this impact housing costs for
Americans and the development of new housing?
Ms. DIVITO. Yeah, exactly. So, you know, insurers have
every right to be concerned about the future of increasing
costs, especially as climate change gets worse, in particular
in specific states like Florida. So all of that just adds on to
ultimate consumer costs as insurers obviously try to hedge
against the potential for increased claims and consumers have a
harder and harder time, I think, actually getting the help they
need when a mass event like a fire in Hawaii or a hurricane in
Florida damages their community.
Ms. MORRISON. Thank you for that context.
And I see that my time has elapsed, so I yield back. Thank
you, Mr. Chair.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ms. Goodlander from the great state of New
Hampshire for 5 minutes.
Ms. GOODLANDER. Thank you, Mr. Chairman, and thank you to
our witnesses for being here today for this really important
hearing.
I am going to jump right into it because, Mr. Owens, I am
very grateful for the five-L framework. I think this is very,
very useful. My grandfather raised us with a six-P framework;
prior planning prevents piss-poor performance. But I am a big
fan of the five Ls. And I want to jump right in and on what
you've designated your fifth L, the cost of laws and
regulation. And I really look forward to reading the study from
2021. It was eye-opening for me. When you think about it right
now, 65 percent of American households are priced out of a
median-priced home in this country. And as you point out in
your testimony, a $1,000 increase in home prices would price
out another 156,405 households. So this is a genuine crisis.
We've got to lower costs by increasing supply and by lowering
the cost of building. And what you've pointed to, you know, as
of 2021, more than $93,000 attributable to the cost of
development and construction.
I want to ask you about something that I am not sure has
come up in this hearing yet, but the Build America, Buy America
provisions that were included in the Infrastructure Investment
and Jobs Act, I am very supportive of the underlying goals. In
practice, what I've seen on the ground in New Hampshire is that
the way that they've been implemented, particularly as it
relates to the construction of new residential housing, has
created some really, I think, unintended effects and costs and
made additional barriers to building quickly.
So I wanted to start with you, Mr. Ohms. Can you talk about
some of the challenges that your Members have faced with
respect to the Build America, Buy America, or BABA compliance?
Mr. OWENS. I wish I could. Yeah, I haven't seen any direct
effects in, in my own business. We've seen delays being one of
the bigger, you know, mainly on when we look at some of what
happened with the lumber market, the domestic lumber market
over the years where mills closed. We had less mills out there
doing the OSB, and then when the when the reinvestment or the
ask was, you know, the Build America, Buy America came back
into play, it was one of those things. I lived that every day
in Flagstaff, Arizona, where we've had our trees to be
harvested marked for the whole 10 years I've been out there.
And we just can't get enough workforce in quickly enough, let
alone to get those logs to a mill versus even getting the mill
back up to speed and producing OSB at maybe a more affordable
rate than we're paying now. So that's really the only thing
that I could comment on at this point.
Ms. GOODLANDER. Well, I'll submit questions for the record.
I'd be interested to hear from all of our witnesses on that
front. Just to go to the material cost, lumber, as you've put
it. The costs of--the costs of material costs. You point out in
your testimony that In April 2026, we've seen costs on the rise
in 2026.
Ms. DiVito, you, you pointed to some pretty eye-popping
numbers when, when we think about just the cost of tariffs on
small home builders. Can you speak to that? Because this, of
course, is directly in the lane of the United States Congress
to end these unconstitutional and costly and chaotic tariffs.
Ms. DIVITO. Yes, thank you. Right, I think the president's
policies are, are putting additional pressures on, certainly on
families struggling with rising prices, but also on businesses,
especially small businesses with tariffs on core construction
materials. Recently 62 percent of small builders reported that
building material prices are a significant problem that they
face, and that's compared to just 25 percent of some of the
largest builders. So small businesses are particularly prone, I
think, to some of the suffering around tariffs on construction
materials.
Ms. GOODLANDER. Mr. Schaefer, can you speak to this in your
own experience?
Mr. SCHAEFER. Yes. For us, tariffs, the impact has been
about 3 to 5 percent is what we've experienced. We're building
200 to 300 homes a year, so we're in the middle. We can buy in
bulk. We're not a big builder, but we're not building one or
two homes. So the impact has not been dramatic, but about 3 to
5 percent.
Ms. GOODLANDER. Well, on thin margins and in the midst of a
crisis, every cost increase has a massive impact. I want to
thank you all. This is such an important hearing. With that I
yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ms. Scholten from the great state of
Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you so much, Mr. Chairman. Came up here
a little bit sooner than I thought, so I am just pulling my
remarks up here. I am grateful for the opportunity to connect
with our witnesses today.
And Ms. DiVito, thank you so much for your work and your
help in my office.
I apologize. Let me just pull these up one quick second. It
is okay, they're not in here. Okay, perfect. Okay, there we go.
Sorry about that.
There is clearly a need across the country for diversified
supply of affordable housing, and our small businesses should
have a larger role in addressing that challenge. Do we want to
pause? Okay. All right. In addressing that challenge, we know
that the industry consolidation is an increasing trend across
the economy, which puts small businesses at a disadvantage. My
bill, the Main Street Competes Act, just passed out of this
committee yesterday. Thank you for the committee's support on
that. And would prompt the federal government to examine our
antitrust laws to find ways for our small to compete in every
market.
Ms. DiVito, my first question is for you. How does
increasing builder consolidation create an unfair playing field
for small businesses?
Ms. DIVITO. Thank you. And that's right. I mean, of course,
there are still many, many small builders in the U.S., but we
have seen more industry consolidation over the last several
years. Housing markets are highly localized, and these impacts
can look different from area to area, but small builders
already at a disadvantage against larger players and the
underlying economic uncertainty and pricing pressures are
putting a lot of them on the brink. Consolidation is bad for
home builders trying to compete, but it's also bad for home
buyers and communities. So I, I commend you for attempting to
stop this trend.
Ms. SCHOLTEN. Absolutely. In West Michigan, I consistently
hear from constituents not only about the cost of housing, but
also the quality of existing housing supply. According to an
analysis by Housing Next, there's approximately 1,454 renter
households and 1,095 owner households in Ottawa County, in my
district, that live in substandard housing conditions. This
means that they are living in spaces with issues like
overcrowding or lacking basic features like plumbing or
kitchens.
Ms. DiVito, sticking with you here, your testimony
highlights how some of the largest construction companies are
facing legal troubles for building low-quality housing. Are
there accountability measures that Congress should consider to
discourage these companies from cutting corners?
Ms. DIVITO. Thank you. Yes. And just this week, there was
reporting that some of the largest homebuilders are increasing
their legal costs due to litigation against sub-quality
building. Ensuring strong federal enforcement, I think, is
crucial. But Congress can also just help promote competition in
the homebuilding industry to prevent some of the bad practices
that we tend to see when larger builders have a larger share of
the market without any competition.
Ms. SCHOLTEN. And what do you think in terms of enforcement
and follow-up? Where are some of the gaps that you see in
making sure that those are consistently enforced?
Ms. DIVITO. That's a good question. I am not as familiar
with what actually happens when the home comes online, but I
think making sure that there is clear and consistent federal
oversight, state and local requirements. We've talked a lot
about streamlining some of those codes, which does not need to
mean compromising on health and safety standards.
Ms. SCHOLTEN. Yeah. I invite you and any of our other
panelists into the conversation too, just about where we could
be helpful there. And you feel free to follow up and submit
them for the record after as well. One last one in the last few
seconds remaining. We know that the President's tariff policies
have created real instability. We've been--this is a theme of
the morning. We've talked about it a lot. For many small
businesses, particularly those in the construction industry who
rely on critically imported housing materials.
Ms. DiVito, again, you mentioned how small firms often do
not have the resources to navigate these erratic tariff
policies. Can confirm. How can the Small Business
Administration do more to insulate small businesses from the
worst of these impacts?
Ms. DIVITO. Thank you. We can certainly provide, I think,
more small business resources by returning investment to the
agency after it lost significant workforce last year. But
ultimately, I believe we need to address the root cause of
these acute pricing pressures, which is the tariffs.
Ms. SCHOLTEN. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back, and I now
move as Chairman to--for one more final question from my side,
and recognize myself for 5 minutes.
Mr. Schaefer as a leader at the Fading West Development
you've been at the forefront of using modular construction to
deliver housing in communities facing urgent need, including
supporting recovery efforts for disaster-impacted residents in
Lahaina, Hawaii, as well as providing workforce housing in
mountain towns like Breckenridge. So my question is, from your
experience deploying modular housing in these very different
contexts, could you explain the key advantages of modular
construction compared to traditional construction? More
broadly, how do you see modular housing helping to address
challenges today's relating to housing affordability, speed of
delivery, and overall supply constraints in high-need
communities?
Mr. SCHAEFER. Yes, thank you for the question. It's speed
to market. It takes us 10 days to build a house in the factory.
Specifically in Lahaina, we built 85 houses in 2 months. They
were shipped, and 2 months later people were moving in after
experiencing complete loss of their homes and community. All of
the subcontractors are in a factory. We are built as a
manufacturing group, so we see ourselves as 18 stations. It's
more set up like a car factory, so very high standard of
building, high quality, and architecturally interesting homes.
And what this allows us to do then is build cheaper and faster.
The repetitive motion of doing a 3-bedroom, 2-bath house over
and over again, means you can speed it up. And that's really
what the affordable housing market is lacking right now. What
manufacturing does then is it makes them cheaper and faster,
which allows us to move folks in very quickly.
Mr. OWENS. Good.
In my time remaining, Dr. Rupnik, in your testimony you
wrote about the need to standardize terminology for
industrialized housing and how it impacts small builders. So
the question would be, could you elaborate on the benefits of
standardized terminology and why it is important to tackle it
first?
Mr. RUPNIK. We have found through analyzing all of the
great work that all the federal agencies do in supporting
housing, not just at HUD but at the Department of
Transportation, U.S. Department of Agriculture, that even when
we talk about Industrialized, factory-built, modular,
manufactured. The agencies themselves do not use consistent
terminology, which makes it very difficult for that very well-
intended funding to reach small businesses. And that signals to
finance and insurance that they don't know what the heck we're
talking about. It is very difficult to understand many of the
barriers that we're talking about finance and some of the
opportunities where this is a less risky process for insurance.
We are still not consistent in what they are.
And so the United Kingdom, for example, has been very cost-
effective in the use of public funds by just saying we're going
to pick a term and we're going to stick with it, both for their
equivalent of subsidies and awards, but also their way of
signaling to finance and insurance that we are talking about a
particular process.
Chairman WILLIAMS. Okay. Mr. Schaefer, in the time I have
left in your testimony, you mentioned that 41 percent of the
construction workforce will retire over the next 5 years. In
February, the committee heard the testimony from witnesses who
spoke about the role career and technical education strengthen
the pipeline for high-demand jobs. So quickly, would you agree
that opportunities through CTE, like that of the Boulder Valley
School District, could support the next generation of the
construction workforce?
Mr. SCHAEFER. Absolutely. Thank you for the question. Yes,
working with trade schools, working with high schools, working
in all university settings is going to be a big part of this
because there will not be enough workers. We are already in
that position. The good thing about modular is it's a
controlled environment. You can cross-train. You can be a part
of our workforce with very little training so we can train you
while you are working. And it, hopefully, will allow for many
more jobs for our workforce.
Chairman WILLIAMS. Okay, thank you very much. My time is
up.
I now recognize Ranking Member Velazquez from the great
state of New York for 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
You know, I am really struck by the fact that here we are
discussing what can we do in Congress to facilitate increasing
the housing supply. I really truly believe that immigration is
part of the equation. I don't think that we will offend the
administration by saying that a lot of the workers that are
legally here do not show up to work because of the fear of
being arrested and sent to a detention center and to any
foreign country where they do not belong. Then there is a study
that the New York Times wrote an article about in terms of who
represents the workforce in the construction industry. A lot of
Latinos, immigrants. A lot of them, and they are not showing
up.
Mr. Schaefer, can you talk to us about the main barriers to
financing for modular companies and how can the federal
government fill the gaps?
Mr. SCHAEFER. Thank you for your question. The challenge
with modular on the financing side is that you have to pay for
the house before it is built. It only takes 10 days to build in
the factory, but it is the opposite of how typical payments are
done in construction. You're paying a large portion before the
home is built. That is a challenge for many banks and, frankly,
developers to understand. I think personally, that has been one
of the problems why modular has not caught on more in our
country. It's going to be education of banks, the federal
government, and the state government, to allow for financing to
happen, whether it is a bridge loan, whatever the case may be,
to get the financing done so that we can build them. So that
has been our biggest challenge.
Ms. VELAZQUEZ. Mr. Rupnik, in your testimony, you mentioned
a dormant authority passed by Congress decades ago. What is
preventing this authority from being used right now?
Mr. RUPNIK. The knowledge that it existed. So we very much
thank HUD and the PD&R Department for funding us to look at
what is out there and what we can use. And we discovered that
National Institute of Building Sciences is really designed to
help both local and state governments as well as industry to
really streamline the regulations. Again, streamline
compliance. I want to be specific about that. It is not the
regulations themselves, it's how we meet those regulations.
Those are very different things. We're working with mostly
states, many of the states here, and we're working with
industry right now. But going back to the question, the work
and the standardization of award criteria that's brought up, is
that for the federal government, what we would love to see is
helping states and industry by adopting a single certification
process for housing products, not for factories.
And then what other countries have done is to point as many
federal programs as possible, simplifying compliance by saying,
if you're certified as a housing product, you qualify for X, Y,
and Z, whatever that is. That will bring standardization. It
will increase competency. It'll make your lives easier because
we're not constantly looking for new ways to create compliance
for new societal issues because we will have new societal
issues. Right now we create new compliance for new issues,
which is where the real cost comes from, not from the societal
goals that we should have. Aging in place, you know, natural
resilience. We want those things, but every time we add one of
those, that's where it is a federal, state, local, and industry
piece. And the National Institute of Building Sciences has been
set up for that, and we're trying to resuscitate that. And it
was really federally funded research that discovered that
needle in a haystack that has allowed us to think through that.
Mr. OWENS. Thank you. I yield back.
Chairman WILLIAMS. The lady yields back. I now recognize
Ms. Goodlander from the great state of New Hampshire for 5
minutes. .
Ms. GOODLANDER. Thank you. I appreciate it.
I wanted to just come back to financing constraints and the
cost of capital and just ask, you know, as I--before I came to
Congress, I worked in the Antitrust Division at the Justice
Department, and one of the things we see, and many of you
pointed out in your testimony, the consolidation in the banking
industry, the assault on community banks has been a huge
barrier and cost driver for increasing the supply. The 21st
Century Road to Housing Act had some good provisions to
strengthen the hand and provide relief to our community banks,
but I wanted to ask our witnesses if you have other ideas,
anything that we left on the table that we could do to support
our community banks. Did we get it all right? That would be a
remarkable feat in the history of this Congress. Well, I'll I
would--if Mr. Owens, unless you have something----
Mr. OWENS. If I may, please. A little bit out of my
wheelhouse here, but we'll--staff will be happy to get back to
you on that. I think we've consulted with you as well as the
Senate, as much as probably any other entity to get this right.
We truly appreciate all your efforts to carry this forward, but
I think that's something that's more of a heavy lift for, for
our staff to get back to you.
Ms. GOODLANDER. Great.
Ms. DiVito?
Ms. DIVITO. Thank you. Yes, I think there's a really good
opportunity to work on follow-up legislation to maximize the
effect of Road to Housing. Specifically, I think a bipartisan
package that focuses on those financing constraints and
leveraging all of the government's potential to resolve some of
them.
Ms. GOODLANDER. Thank you.
I wanted to just come I want to go back for a moment to the
homebuyer. And in New Hampshire, we have pioneered and seen
real success in resident-owned communities, which are
overwhelmingly communities with manufactured homes. This is
truly one of the last remaining affordable paths to
homeownership, and really look forward to working with you all
in making--building on the progress that we made in the bill
passed yesterday. But what I am seeing on the ground in New
Hampshire, resident-owned communities work really well because
it gives people a stake in the decision-making and the
stability of their communities. But what we are also seeing is
a trend of big corporate investors who are buying up
manufactured home communities. What they're doing is, they're
raising the rents, they are adding junk fees, and they're often
leaving residents with nowhere else to go because moving a
manufactured home, as you know well, is practically impossible.
So I wanted to ask about, you know, these--I think
unfortunately a disturbing trend in rising abusive practices by
corporate owners of these communities, and the ways in which
they're jacking up costs.
So I wanted to begin with you, Ms. DiVito. Do you think
that there are measures Congress could take, including
prohibiting corporate ownership of these types of communities?
Ms. DIVITO. Thank you. Yes, I think Congress should very
much build on, I think, some of the negotiations in the Road to
Housing package to make sure that institutional investors in
particular and some of the biggest large, large builders are
not able to just extract from communities by hiking up rates
and rents and tacking on unnecessary fees.
Ms. GOODLANDER. Mr. Schaefer, could you just speak to what
you've seen in your own experience and what you think Congress
might be able to do to support resident-owned communities that
are stable and affordable?
Mr. SCHAEFER. Yeah, thank you. The things that I
highlighted were the public-private philanthropic partnerships,
and we have seen those be the most successful. When we talk
about the word ``affordable and housing,'' it really shouldn't
even be used in the same sentence because there's no such thing
as affordable housing. If you're already paying $100,000 before
you even start building, it's almost impossible. So most of the
projects we're involved in include either state funding to
bridge that gap or federal funding. Local communities are in
such dire need that they're waiving tap fees, and they're
making the entitlement process quicker so that the cost of the
overall house is cheaper to hit that 80 to 120 AMI, which is
the area we work in. Thank you.
Ms. GOODLANDER. Thank you.
Well, thank you all. And with that, I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And I'd like to thank our witnesses today for their
testimony, for being here and for appearing. Without objection,
Members have five legislative days to submit additional
materials and written questions from the witness to the Chair,
which will be forwarded to the witnesses. I'd ask the witnesses
to please prompt--or please respond promptly. And if there's no
further business or objection, the committee is adjourned.
[Whereupon, at 11:51 a.m., the committee was adjourned.]
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